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Should You Buy Netflix Stock Before Oct. 20? History Has a Clear Answer.

Via Motley Fool

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Netflix (NASDAQ: NFLX) reports third-quarter results next week, and I wish I had some better news. Shares of the leading premium video service have fallen 40% over the past year. Momentum isn't on its side.

Expectations are also low heading into Tuesday's fresh financials. Netflix's own guidance calls for revenue to rise 11.7%, its weakest year-over-year growth in three years. Revenue growth should decelerate for the third consecutive quarter.

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The stock's trending lower heading into a critical earnings report, but things don't have to end badly. Sometimes a stock has fallen so out of favor that even a ho-hum result can trigger a rebound. Is this a dinner bell for investors, like me, who have suffered through the past year of downticks?

Not so fast. There's a pretty troublesome chart I want to show you. It's basically a look at Netflix stock since the midpoint of last year. Check it out, and I'll see you at the other end of the chart.

Did you notice the five purple circles in the chart since the end of June last year? Those are the moments Netflix announced each of its last five quarterly reports. The stock initially moved lower after each of those updates.

Outside of an early springtime rally, when it broke off its deal to acquire Warner Bros. Discovery followed a few weeks later by a price increase, it's been mostly downhill.

Netflix has a history of bouncing back. It recovered from an 83% plunge following the Qwikster fiasco in 2011. Netflix plummeted 77% from peak to trough in 2022, when many growth stocks crashed, and it made that drawdown back in just two years.

The trend is fairly clear. Netflix has taken a hit following five consecutive earnings seasons. The longer term is more encouraging. Netflix bounces back.

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Rick Munarriz has positions in Netflix. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.

Should You Buy Netflix Stock Before Oct. 20? History Has a Clear Answer. was originally published by The Motley Fool

Read original at Yahoo Finance News

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